- Treasurer Morrison gives buyer until May 3 to respond
- Deal `contrary to the national interest,' Morrison says
Australian Treasurer Scott Morrison is set to block the sale of the country’s most iconic cattle company to a Chinese buyer, avoiding any protectionist backlash at home weeks before elections.
A consortium led by Shanghai Pengxin Group last week agreed to buy 80 percent of S. Kidman & Co. in a deal valued at more than A$370 million ($283 million). Local investment group Australian Rural Capital Ltd. was set to buy the rest of the company.
In a statement Friday, Morrison said he’s concerned the deal “may be contrary to the national interest” because of the size and significance of Kidman’s cattle ranches. At the same time, Morrison said he’s concerned that Kidman -- put up for sale almost in its entirety -- wasn’t affordable for an Australian buyer.
Australian Rural Capital said Friday it was discussing Morrison’s announcement with Shanghai Pengxin. The Chinese bidder has until May 3 to respond, Morrison said.
With an election looming in July, Prime Minister Malcolm Turnbull’s government is shoring up support at home. This week he awarded a A$50 billion contract to France’s DCNS Group to build 12 submarines in South Australia state, rather than offshore, in order to save local manufacturing jobs. Chinese investment in Australian agriculture is often publicly opposed, even though the industry needs foreign capital to fully tap export demand.
Morrison said he also has to gauge how the Australian public would react to a deal of this scale.
“The size and significance of the portfolio, combined with the impact the decision may have on broader Australian support for foreign investment in Australian agriculture, must also to be taken into account in this case,” Morrison said in his statement.
Founded in 1899 by Sidney Kidman, who became known as the Cattle King, the company is Australia’s largest private landowner. Shanghai Pengxin was among Kidman’s suitors last year before Morrison blocked the sale to a foreign buyer. He said at the time that the proximity of the Anna Creek ranch to a weapons testing range could undermine national security.
In response, Shanghai Pengxin carved out Anna Creek and teamed up with Australian Rural Capital to dilute any final Chinese ownership of Kidman. The cattle company’s chairman, John Crosby, said last week that their agreement with the buyers complied with every request from Australia’s Foreign Investment Review Board.